Bankruptcy looming for Stockton diocese

Saturday

Sep 7, 2013 at 12:01 AM

STOCKTON - Churches within the Roman Catholic Diocese of Stockton will distribute a letter this weekend to their 250,000 parishioners from Bishop Stephen Blaire, describing just how close the diocese is to filing for bankruptcy protection.

Joe Goldeen

STOCKTON - Churches within the Roman Catholic Diocese of Stockton will distribute a letter this weekend to their 250,000 parishioners from Bishop Stephen Blaire, describing just how close the diocese is to filing for bankruptcy protection.

"We continue to investigate our options, and no final decisions have been reached. I feel, however, that it is important to tell you that options other than filing for bankruptcy protection have not emerged. It appears likely to me that the diocese will need to reorganize financially under the protection of the Bankruptcy Court," Blaire wrote in an advance statement issued to the media Friday.

"I want to keep you and the wider community informed as best I can in this process. That is why I am meeting in the days and weeks ahead with your pastors and with others who may be affected by a bankruptcy filing by the diocese," the statement continued.

During an interview Friday afternoon at the six-county diocesan headquarters in downtown Stockton, Blaire explained why he was issuing his statement now.

"I am doing the best I can to keep the people informed. We had a big meeting Thursday with all (35) pastors and each brought a staff member or a lay member of their parish finance council with them. I updated them and asked them what questions they were hearing," Blaire said.

Catholics around the diocese are primarily concerned about the future financial stability of their own parish and their donations that sustain that parish.

As Blaire has stated before, the parishes and other Catholic institutions, such as high schools, cemeteries and Catholic Charities, have been organized as separate corporations and "are not the subject of the possible bankruptcy filing." He also said specific funds established for clear purposes such as tuition assistance should not be affected.

"The diocese has a balanced budget. We're operating well. People are still generous, and we are meeting our expenses. The diocese itself is fine," Blaire said.

The problem is finding the money to meet the obligations the diocese will face from three current sexual abuse lawsuits and one pending lawsuit. Through 2010, the diocese had settled 22 sex abuse lawsuits at a cost of $18.7 million, and the cupboard is almost bare, according to Blaire.

"We have no apparent way to meet the expenses of pending lawsuits and possible future claims," his letter stated.

A Chapter 11 bankruptcy reorganization, which Blaire now believes is "the right thing to do," will allow the diocese to continue operating and pay its creditors over time. It doesn't mean, however, that other Catholic entities within the diocese won't be challenged by creditors in bankruptcy court.

"It's a complicated process, as we've learned from the city of Stockton bankruptcy," Blaire said, noting that is why he is communicating with priests and lay members from throughout the diocese before proceeding. He also plans on providing answers to parishioners' most commonly asked questions in the near future.

The Stockton diocese would not be the first within the Catholic Church to file for bankruptcy protection, and Blaire has taken note of that, learning from their experiences, including the dioceses of San Diego and Orange.

"We're in a good place structurally within our organization. Secondly is the importance of communication, keeping everybody informed. We're an open book with nothing to hide. The third thing we learned is that creditors will challenge everything, but the bankruptcy courts said separate funds can't be touched," he said.

Since Blaire issued a statement earlier this summer about the possibility of bankruptcy, parishioners appear to be aware of the diocese's dire financial picture. Churchgoers leaving a special First Friday Mass at downtown's historic St. Mary's Church all expressed regret about the situation while remaining supportive and optimistic about the future.

"I know there's a lot of things going on. Nothing gets changed quickly, but our faith in our Lord doesn't change," said Jayne Ortiz, a parishioner from Presentation Church in north Stockton.

Elysse Brown, a member of St. Luke's Church in central Stockton, agreed.

"It's very sad. The church is down now, but it's going to rectify itself. The sexual abuse is terrible, and it seems the only way we can rectify it is financially. But we will heal. We will be fine. This is not the end" Brown said. "We will prevail.

"In the bigger picture, whether it's bankruptcy or religious persecution, we will continue to be attacked because we take hard stands on issues like abortion. Christ will get us through. We have faith no matter what is happening."

Blaire said if the diocese runs out of money, "the victims down the line could get nothing, and they deserve their fair share of compensation."

He admitted that "some people are angry that so much money has been paid out. They believe the situation was poorly handled."